Section 28 penalty notice and limits on reference powers under tax law upheld against the assessee.

Section 28 could be invoked during appellate proceedings where the authority was satisfied that the assessee had concealed income or furnished inaccurate particulars; the notice issued over the disputed excise-duty item was therefore valid. Section 66(4) could not be used to compel a reference of questions the Tribunal had refused to state under section 66(2), because that power was limited to additions or alterations to an incomplete statement already referred. The refused questions were distinct from, and not implicit in, the referred question, so the attempt to enlarge the reference failed.

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Issues: (i) Whether the Appellate Assistant Commissioner was legally justified in issuing notice under section 28 of the Indian Income-tax Act in respect of the disputed excise-duty item. (ii) Whether the High Court could, in proceedings under section 66(4) and section 66(5), require a reference on questions which the Tribunal had refused to refer under section 66(2).

Issue (i): Whether the Appellate Assistant Commissioner was legally justified in issuing notice under section 28 of the Indian Income-tax Act in respect of the disputed excise-duty item.

Analysis: The statutory power under section 28 could be invoked where, in the course of proceedings under the Act, the authority was satisfied that the assessee had concealed income or deliberately furnished inaccurate particulars. The disputed amount had been debited as expenditure in a year to which it did not relate, and the notice was issued in the course of the appeal proceedings after the authority formed the requisite satisfaction.

Conclusion: The notice under section 28 was validly issued and the point was decided against the assessee.

Issue (ii): Whether the High Court could, in proceedings under section 66(4) and section 66(5), require a reference on questions which the Tribunal had refused to refer under section 66(2).

Analysis: The power under section 66(4) was confined to requiring additions or alterations to an incomplete statement of a case already referred, and could not be used as a substitute for an application under section 66(2) to compel reference of a question the Tribunal had refused to state as involving only fact. The refused questions were distinct from the question actually referred and were not implicit in it.

Conclusion: The High Court was not bound to call for a reference on the refused questions, and this contention failed against the assessee.

Final Conclusion: The legal effect of the decision was that the penalty-related notice was upheld and the assessee's attempt to enlarge the reference jurisdiction failed, leaving the revenue's position undisturbed.

Ratio Decidendi: Section 66(4) cannot be used to secure a reference of questions the Tribunal has refused to refer under section 66(2), and section 28 may be invoked when the authority, in the course of proceedings, is satisfied that inaccurate particulars of income have been deliberately furnished.

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